Japan agency affirms strength of Philippine banking system

The Bangko Sentral ng Pilipinas (BSP) welcomed the latest report from the Japan Credit Rating Agency (JCR), which reaffirmed the soundness and stability of the Philippine banking sector.

JCR maintained the country’s investment-grade credit rating at “A-” with a “stable” outlook, citing a resilient financial system as a key driver.

The agency highlighted robust loan growth, declining non-performing loan (NPL) ratios, and capital adequacy levels that exceed both domestic and international standards.

“The BSP continues to implement policies that promote robust capitalization and sound risk management among banks,” said BSP Governor Eli M. Remolona, Jr.

“These support financial stability and further build confidence in the domestic financial system,” he added.

As of end-July 2025, the capital adequacy ratio of universal and commercial banks stood at 16.5 percent on a consolidated basis.

The NPL ratio also improved to 3.1 percent, down from 3.6 percent in 2021, reflecting improved asset quality.

JCR’s report further cited the Philippines’ easing inflation and healthy external buffers as positive indicators.

Inflation averaged 1.7 percent during the first eight months of 2025, while gross international reserves (GIR) reached USD 105.9 billion by the end of August.

This reserve level covers 7.2 months’ worth of imports and is 3.4 times the country’s short-term external debt.

JCR emphasized that the country’s “solid foreign currency liquidity position” enables it to remain “remarkably resilient” against external shocks.

Maintaining an investment-grade rating reduces credit risk and allows the government to secure financing at lower cost.

This enables greater fiscal flexibility to fund development initiatives and public programs.